7-Eleven closes debut at 10.87% premium

KUALA LUMPUR: 7-Eleven Malaysia Holdings Bhd, the largest listing on the stock exchange to-date, closed at a 10.87% premium to its RM1.38 issue price on its debut, ending the day as the most actively traded counter.
7-Eleven Malaysia's shares opened at RM1.45, a 7 sen or 5% premium above its issue price of RM1.38. The counter ended the day at RM1.53, with some 202 million shares changing hands last friday.
Speaking at a press conference after the listing ceremony, deputy CEO Gary Brown said it plans to invest RM40 million over the next two years to construct a new and larger combined distribution centre (CDC) to be opened by the end of 2015.
He said the new CDC is to support the continued expansion of its store network and that the convenience store operator is evaluating its supply chain strategy for the new CDC.
7-Eleven Malaysia currently manages and oversees 90,000 sq ft of usable warehouse space in its existing CDC in Shah Alam, which handles and distributes 53% of its products by volume to stores in Peninsular Malaysia. On-the-ground operations is however outsourced to LF Logistics Services (M) Sdn Bhd.
"As we expand into fresh food offerings and a range of products, supply chain is a critical component of our infrastructure. Therefore we're putting focus on planning and investigating what facilities we need to further enhance our supply chain.
"Does it (the new CDC) become a facility for various products, or does it become a facility for purely flow-through distribution? Do we need satellite distribution systems or do we need one consolidated distribution centre? We're in the process of evaluating that. We need to find the most efficient and cost effective means of our supply chain," Brown told a press conference after 7-Eleven Malaysia's listing ceremony here on friday.
Its prospectus indicated that the new CDC will have 38% greater capacity than the existing CDC and will feature air-conditioned and chilled facilities, as well as improved IT systems and a warehouse management system. With the chilled facilities, the new CDC will enable the company to handle a variety of perishable products that vendors currently deliver straight to its stores.
The new CDC is also expected to have a gross built-up area of 166,000 sq ft and usable warehouse space of 124,000 sq ft which will eventually replace the existing CDC. It is located 9km away from the existing CDC in Shah Alam.
7-Eleven Malaysia independent non-executive chairman Shalet Marian said on the back of a successful marketing process, it priced the initial public offering (IPO) at RM1.38 per share, valuing the company at RM1.7 billion.
This implies an offer size of RM731.8 million, with an additional RM102.2 million that could be raised from the over-allotment option, taking the total offer size up to RM834 million if the over-allotment option was exercised in full.
7-Eleven Malaysia's IPO would be the largest IPO to be completed in Malaysia and the third largest international IPO in Southeast Asia so far in 2014.
"In addition to the cornerstone demand, we saw strong and broad based investor participation from long only funds, sovereign wealth funds, hedge funds and high net worth accounts. More importantly, the strength of demand is supported by a high quality line-up of investors, which would underpin the core of a blue chip shareholder register for the company," Shalet added.
With almost 1,600 stores serving over 900,000 customers per day, 7-Eleven Malaysia is the largest standalone convenience store operator in Malaysia with 82% market share as of March 2014.
Going forward, it will be spending up to RM520 million over the next three years to open and refurbish 600 stores respectively, as well as to invest in its IT and logistics infrastructure.